Producing Medicines in Africa Will Only Work if They Can Be Distributed Properly - Julius Mugwagwa

10 February 2015

A parliamentary bill proposing that the UK allocate 0.7% of its GDP for international aid has led to the usual criticism levelled against international aid: that in times of austerity, the country can’t afford to spend money helping others overseas, let alone setting a mandatory amount. In times like this, however, no one in their right mind would argue against better or more effective spending of international aid funds, something that has been called for before.

When it comes to health in developing countries, various UK aid agencies, including the Department for International Development and UK Aid Network (UKAN), a coalition of British NGOs, have for many years been at the forefront of efforts to strengthen health delivery systems. The House of Commons’ international development committee recently published the results of an inquiry into how DfID’s activities in this area could be made more effective. The inquiry noted that while progress had been made, spurred on by the Millennium Development Goals, more still needed to be done to ensure efficiency, tackle growing challenges such as non-communicable diseases and move countries towards self-sufficiency.

Our development and policy group at The Open University has been working on how the best outcome can be achieved from available resources. In one project we’re focusing on two developing countries – South Africa and Zimbabwe – to see how and where money should be more effectively spent in health. One particular issue is access to medicines, which relies on both supply and distribution to work well. But which should come first when it comes to health spend?

We looked at the role that companies and producers of medicines from, or based in, these countries can play in providing safe, efficient, affordable and high-quality medicines and other health products.

As in many other nations, healthcare systems in African countries such as South Africa and Zimbabwe are facing sustained pressure from changing regulations and an influx of patients demanding the same or better-quality care, at the same time as rising concerns about the cost, timeliness and adequacy of medicines supplied by multinational companies. At present up to about 70% of Africa’s need for medicines is covered by imports. It’s worth noting that although the continent has 14% of the world’s population, Africa produces only 3% of the world’s medicines.

There are arguments, therefore, that if health system targets are to be met in Africa – and to satisfy the envisaged growth in the African medicines market – a good place for aid agencies and others with money to invest to start is on strengthening the capacity of local producers of medicines and health products. Some argue, however, that ‘health dollars’ would be better spent on strengthening logistics and delivery systems to ensure that the medicines, whether produced locally or imported, can be more efficiently brought to hospitals, clinics and other outlets.

As one supply chain specialist based in Africa noted, we shouldn’t lose sight of the fact that it is expensive to set up and sustain manufacturing plants. The challenges in taking this route include dealing with heavy taxation, lack of access to inputs and raw materials, strong competition from foreign manufacturers and the lack of research and development. Also, in the absence of guaranteed local markets of sufficient size and good distribution services, the benefits of producing medicines locally may not be realised.

The majority of developing countries face a number of unchanging health system and logistical weaknesses which constrain the extent to which health products can be brought to patients, or patients brought to health products. For example, South Africa and Zimbabwe have faced challenges when it comes to getting all deserving patients on HIV/AIDS treatment programmes, because some of the people are in hard-to-reach rural or farming areas – and because there is a shortage of doctors to prescribe medication and nurses to attend patients.

So there is debate about where the money should go first. For the current Ebola pandemic in West Africa, for example, an effective cure – whether produced locally or imported – would have saved lives, but would have hinged on healthcare and wider system preparedness (which unfortunately is missing in the affected countries). So regardless of where the products are coming from, what is indispensable is a 'GDP' or a 'good distribution practice' – and that’s where the first money should go.

Others argue instead that resource-poor African countries should give priority to strengthening their regulatory and governance systems, which would result in local pharmaceutical manufacturing having the desired positive impact on health system performance, equity, affordability and low-cost access to medicines and other medical products.

A number of countries in Africa have had pharmaceutical manufacturing activities for a long time, some dating as far back as the 1930s, yet some long-standing local pharmaceutical companies are ceasing operations (for example CAPS Pvt Ltd in Zimbabwe) while others are losing market share. The void they are leaving is easily being filled by products from India or China, leaving one to wonder whether local pharmaceutical production will have an impact that goes beyond saving factory worker jobs.

Keeping up with production costs is proving difficult, especially with outdated equipment and the compounding reality that, for many companies, their product range requires them to buy active pharmaceutical ingredients (and other key medicine components) from competitors in India and China.

How African countries will meet their needs for medicines, especially medicines that big multinational companies may not consider profitable, is a daunting challenge. Aid agencies have played – and continue to play – big and decisive roles in the supply of medicines to patients in Africa, through financial resources during emergencies or through programmes to strengthen the health system. But driven by local realities and experiences, new thinking and innovations in the way medicines are distributed may well be what African countries need most urgently.

When this is working properly, local manufacturers may well be able to leap back into producing medicines locally – and crucially, be in a better position to compete.

OU Research Fellow Julius Mugwagwa is currently implementing a project investigating innovations in health spending in South Africa and Zimbabwe, with funding from the UK's Economic and Social Research Council. This post first appeared on The Conversation and we are grateful for their permission to reproduce it.